MUMBAI, India (HedgeWorld.com)–The comment period has ended on an Indian government agency’s proposal to allow foreign hedge funds to operate in India’s securities markets under certain restrictions.
On May 24, for comment through June 8, the Securities and Exchange Board of India published a report on hedge funds, acknowledging that there are skeptics who believe they ought to be excluded due to the role large hedge funds may have played in the East Asian financial crisis of the 1990s.
“However,” SEBI said, “subsequent research could not produce robust evidence implicating the hedge funds for precipitating the crisis.” Furthermore, hedge funds bring greater liquidity to a nation’s markets and increase the risk-management options for their counter-parties.
The report was prepared by SEBI’s office of foreign institutional investment and stressed that it didn’t propose letting such funds “mobilize investment from India by offering their products to Indian investors. Therefore, regulatory issues related to investor protection have not been considered in this report.”